Continuations: Don't Let the Funky Math of Convertibles Bite You
Larry M
· 1 month ago
When talking to potential investors, should you focus on full-diluted (effective) valuation or the pre-conversion? I find that many investors use warrants to sweeten their deal and then previous investors get flustered because of the different scenarios as they don't understand their dilution because the simple math doesn't work out.
albert
· 1 month ago
We always look at everything on a fully diluted basis. I think if you present a deal to existing or potential investors you should do the same. It's not a good way to start off a relationship or to treat existing investors to have them surprised about the full impact of a deal.
kidmercury
· 1 month ago
i love these posts you and fred did today. quite possibly the greatest single day of blogging in USV history. congrats on the milestone, albert!
albert
· 1 month ago
Thanks, although that may be stretching it a bit! Bijan had a related post today also and apparently Brad Feld did a couple of days ago (but I somehow missed that). Will try to pull them all together at some point.
All Comments
I find that many investors use warrants to sweeten their deal and then previous investors get flustered because of the different scenarios as they don't understand their dilution because the simple math doesn't work out.